DOCSLIB.ORG

What Is Business and Industrial Marketing?

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
What Is Business and Industrial Marketing? What Is Business And Industrial Marketing? Ernest F Cooke There is no single, clear, specific definition of business definition of industrial marketing. We will also or industrial marketing. Existing definitions are incon• examine the differences between industrial and sistent and there has been a claim that there is no differ• consumer marketing and present a rationale for ence between industrial marketing and consumer mar• the position that industrial marketing, despite 1 keting. It seems appropriate for the inaugural issue of some similarities, is significantly different from a journal on business and industrial marketing to ex• consumer marketing and therefore is properly amine this problem and to attempt to clear up the treated as a separate subject. confusion. DEFINITIONS INTRODUCTION There are two points that need to be made It is hard to find a definition of business or in• about the term "industrial marketing": dustrial marketing, and those few that exist are not consistent with one another. In addition, it is 1. It is a misnomer in that the word "industri• claimed that there is no significant difference be• al" implies industry only, whereas, indus• tween consumer marketing and industrial mar• trial marketing actually has come to mean keting and that it is a mistake to differentiate be• more than just marketing to industry. tween them. This article examines the issues.2 First let's examine the various definitions per• 2. Through common usage, consumer mar• taining to industrial marketing and the nature of keting and industrial marketing have come the problem of defining industrial marketing. to cover the entire marketing universe and Then we can attempt to present a simple, concise are considered mutually exclusive. Ernest F. Cooke, Ph.D., Case Western Reserve University, is a Professor of Marketing and holds the Chair in Sales, en• dowed by Sales and Marketing Executives of Memphis, in the Fogelman College of Business and Economics at Memphis State University. Th author wishes to thank James Richard Shannon for his assistance in preparing this article. VOL. 1 No. 1 FALL 1986 9 THE JOURNAL OF BUSINESS AND INDUSTRIAL MARKETING This second point does not mean that there are and contradictions in existing definitions of in• not other types of marketing. For example, do• dustrial marketing. However, they do not show mestic and international marketing also cover the all of the problems. Some other discrepancies in• entire marketing universe and are also considered clude the questions of inclusion or exclusion of mutually exclusive, and agricultural marketing or agricultural markets and the middlemen in con• nonprofit marketing can be consumer or industri• sumer markets. Before a single definition can be al, international or domestic. developed, guidelines distinguishing industrial marketing from consumer marketing must be Defining industrial marketing usually starts established. with one of three approaches: (l)the product defi• nition approach, (2)the market definition ap• proach, or (3)the marketing activity approach. VARIOUS APPROACHES It has been suggested that the most useful defi• The first view is the product definition approach. nition of industrial marketing should focus first This focuses upon the industrial product and how on the industrial customer and then on the indus• to differentiate an industrial product from a con• trial product. The problem with this view is that sumer product. This is the easier of the three ap• the greatest disparity in defining industrial mar• proaches; there is more agreement on what con• keting comes in defining industrial markets (the stitutes an industrial product. Industrial goods industrial customer). One definition of industrial are defined in terms of the product characteristics marketing is "the marketing of goods or services or uses. The definition from the AMA is, "Indus• to commercial enterprises, governments, and trial Goods-goods which are destined to be sold other non-profit institutions for resale to other in• primarily for use in producing other goods or ren• dustrial consumers or for use in the goods and ser• dering services as contrasted with goods destined vices that they, in turn, produce." This follows the to be sold primarily to the ultimate consumer. suggestion of concentrating first on the They include equipment (installed and accesso• customer.1 ry), component parts, maintenance, repair, and operating supplies, raw materials, and fabricating Another definition says "industrial marketing is materials." The complication inherent in this clas• the marketing of goods and services to industrial sification system is that many products can be ei• customers for use in the production of goods, for ther industrial or consumer, depending on how use in the operations of businesses themselves, they are used. This is why the market definition and for use by non-political institutions."5 This comes into consideration. differs in two ways from the first definition. It concentrates on product rather than market and it excludes governments (nonpolitical) while the CHARACTERISTICS OF INDUSTRIAL MARKETING first specifically includes political institutions A discussion of industrial markets must begin (governments). with a look at some of the characteristics that dis• tinguish them from consumer markets. First, and Still another author defines industrial market• most important, the demand in industrial markets ing as "human activities directed toward satisfying is derived. No industrial purchase would be made wants and needs of professional buyers and other if it weren't for some consumer demand. All in• individuals influencing purchases in commercial, dustrial sales are made to companies or institu• institutional, and governmental organizations tions that sell to other companies or institutions 3 through the exchange process." This definition who will, somewhere down the line, provide a concentrates on the marketing aspect of industri• product or service to ultimate consumers. This is al marketing, the third outlook. especially apparent with companies that sell goods that become part of the final consumer product Even more marketing oriented than the last (raw material, component parts) or that are used definition is the definition by the authors of a in producing the consumer product (equipment, basic textbook in marketing. They say "industrial machine maintenance, and repair parts and ser• marketing is a set of activities directed toward fa• vices). It is beyond the scope of this paper to dis• cilitating and expediting exchange involving cus• cuss the significance of derived demand to eco• tomers in industrial markets and industrial 4 nomic analysis, forecasting, and marketing products." This deals exclusively with marketing, strategy. depending on further definitions to explain in• dustrial markets and industrial products. Derived demand is an important and unique as• These four examples show the discrepancies pect of the difference between industrial markets 10 WHAT IS BUSINESS AND INDUSTRIAL MARKETING? and consumer markets. However, there are five similar), a customer of the buyer will generally get other characteristics which help differentiate be• the order. tween the two markets: Stable Buying Relations (Long-Term Relationships). Concentrated Markets. The consumer market Once a buying relationship is established in indus• consists of somewhere over 200 million people. trial purchasing, it is very difficult for outside The industrial market, on the other hand, is limit• sources to break into the purchase chain. A buyer ed to slightly over 10 million (including 2 million usually establishes more than one supplier for a farmers). Also the 80/20 principal applies to in• frequently used product, helping to ensure a dustrial markets. In 1972 the top 500 of the smooth, adequate supply, maintain price competi• 300,000 manufacturers (1/6 of 1%) accounted tion (to prevent a drastic price increase), and pre• for 67% of all industrial output. In farming, less vent overdependence, but once two or three than 10% of the farmers produce over 50% of the sources have been established it is difficult for a output. new supplier to establish a relationship. In some Industrial markets are also concentrated geo• situations sellers and buyers set up joint graphically. Four of the top five tire manufactur• ventures. ers are headquartered in Akron, Ohio. The big three auto makers are all based in Detroit, and The two-way flow of information, engineering, Milwaukee and St. Louis are major beer produc• and innovation is very pronounced in industrial ers. Steel and coal are concentrated in the north• marketing, where there are frequently long east, particularly Ohio, Pennsylvania, and West chains of buyer-seller relationships with many Virginia. branches. A simplified example would be steel manufacturer to turbine blade manufacturer to Rational Buying Motives. Factors that influence jet engine manufacturer to airframe manufactur• an industrial purchase are, in general, more ra• er to commercial airline. One of the numerous tional than those affecting consumer purchases. branches would be electric motor and control This does not mean that industrial marketing is manufacturer to forging press manufacturer to totally rational, only more rational. Part of this is turbine blade manufacturer. In these long chains due to organizational constraints. Profit maximi• the individual firm, when acting as a buyer, fre• zation or cost minimization are usually a major quently is an instigator rather than
Load more

Recommended publications
  • Industrial Marketing Network Perspective
    Mälardalen University EFO703 Bachelor Thesis in School of Sustainable Development Business Administration of Society and Technology Examiner: Ole Liljefors Tutor: Per Nordqvist INDUSTRIAL MARKETING in a NETWORK PERSPECTIVE A Qualitative study of ABB Crane Systems and its Sales Network Spring Semester 2011 Peter Strömberg & Sandeep Jain Abstract Course: EFO703 Bachelor Thesis in Business administration 15 ECTS University: Mälardalen University School of Sustainable Development of Society and Technology, Västerås Authors: Peter Strömberg & Sandeep Jain Examiner: Ole Liljefors Tutor: Per Nordqvist Research question: How is the sales network of ABB Crane system related to industrial marketing in a network perspective? Purpose of the research: The main task is to investigate if the sales network of ABB Crane Systems is related to established theory of industrial marketing in a network perspective. Method: The research strategy has been formed from a deductive approach and the empirical data has been gathered with a qualitative approach. Both primary and secondary data has been used in order to fulfill the purpose of our paper. The empirical findings represent the primary data which was gathered through interviews with the management of ABB Crane Systems. The secondary data was gathered from journal articles, literature, ABB’s website and Mälardalen University’s databases. Conclusion: With the help of three different theories, it has been concluded that the sales network of ABB Crane Systems has a rather close relationship with Industrial Marketing in a network perspective. However, it has also been found that the company is not entirely related to the important aspect of embeddedness in its sales network, which is a deliberate strategy in order to minimize the risks of miscommunication, maintain control over the sales process, remain flexible, as well as not waste scarce resources.
    [Show full text]
  • Developing Advertising Messages: Examples from the Swedish Print
    2004:195 SHU BACHELOR’S THESIS Developing Advertising Messages Examples from the Swedish print media Eva-Lina Sandin Nadja Äkäslompolo Social Science and Business Administration Programmes Department of Business Administration and Social Sciences Division of Industrial Marketing and e-Commerce INTERNATIONAL BUSINESS AND ECONOMICS PROGRAMME Supervisor: Tim Foster 2004:195 SHU • ISSN: 1404 - 5508 • ISRN: LTU - SHU - - 04/195 - - SE ACKNOWLEDGEMENTS We have now reached our goal. This thesis is written as our bachelor’s thesis in the Program of International Business at the Division of Industrial Marketing at Luleå University of Technology. The hard work during ten weeks of the spring semester in 2004 has been very interesting and provided us with a deeper knowledge and experience within the interesting area of advertising messages in the Swedish print media. The thesis has also increased our skills regarding academic and scientific writing. We would like to give our honest appreciation and thanks to those who have helped us during the practice of writing and making this thesis possible. First of all, we would like to thank our supervisor Mr. Tim Foster Ph.D. candidate at the Department for Industrial Marketing at Luleå University of Technology, for his constant support and assistance during this time. Furthermore, he has helped us to keep our motivation up with excellent guidance on our way to complete the thesis. Finally, we would like to thank our families for putting up with us, and always showing their support whenever needed. We hope that this thesis will be interesting and useful reading material for other students, researchers, and people interested in getting a better insight in the subject area.
    [Show full text]
  • Pricing in Industrial Markets a Case Study at Ovako Steel AB
    2005:035 CIV MASTER’S THESIS Pricing in Industrial Markets A case study at Ovako Steel AB KENNETH AHLBERG MASTER OF SCIENCE PROGRAMME Luleå University of Technology Department of Business Administration and Social Sciences Division of Industrial Marketing and e-Commerce 2005:035 CIV • ISSN: 1402 - 1617 • ISRN: LTU - EX - - 05/35 - - SE Preface This thesis marks the end of my education for a master’s degree in Chemical Engineering at Luleå University of Technology. The thesis was carried out at the marketing department of Ovako Steel AB in Hällefors, Sweden. First of all I would like to thank the people at the marketing department at Ovako Steel AB in Hällefors, for giving me the opportunity to conduct the research that was developed to this thesis, and helping me find the information I needed, by answering the many questions I had. Special thanks go to my supervisor at Ovako, Åke Nyström. Secondly I would like to thank my academic supervisor Lars Bäckström at the division of Industrial Marketing and e-Commerce at Luleå University of Technology, for the invaluable help he has given me with comments along the way. Third I would like to thank Jill Franzén for helping me with the proofreading and supporting me when the research was going slow. Finally I would like to thank all other people that have helped me with this thesis. Luleå, January 2005 Kenneth Ahlberg i Abstract The aim of this thesis has been to provide a better understanding of pricing within industrial markets. Previous researchers have established that when deciding pricing strategy and ultimately the final price for a product, the marketing managers must take many factors, both internal and external, into consideration.
    [Show full text]
  • Promotion on the Industrial Products Market
    Bulletin of the Transilvania University of Braşov Series V: Economic Sciences • Vol. 8 (57) No. 2 - 2015 Promotion on the industrial products market Raluca-Dania TODOR1 Abstract: The literature abounds with articles and books on marketing and especially promoting consumer products. As consumers for these goods we are exposed each day to promotional messages of major product brands in order to attract or retain us when we are already buyers. Fewer things have been written about how to do promotion of industrial goods, which are a special category of goods, but have a very high quota in trade of goods, both nationally and internationally. This article will analyse the main methods used to promote the industrial brands and products on the market. Key-words: industrial goods, advertising, business to business market. 1. Introduction Industrial goods are raw materials, equipment, or product components required by the business for the production or distribution of goods or other services. Industrial goods range from mineral, agricultural, and forestry products to complex electronic equipment. Consumer goods, on the other hand, are tangible commodities that are produced and purchased to satisfy the wants and needs of the buyer. The process and industrial products (P & IP) includes some of the world's most complex and diverse organizations and brands producing chemicals, metals, industrial products, forest, paper and packaging. In terms of production goods and services, also called industrial goods have certain characteristics that can be summarized
    [Show full text]
  • 'Market' in Industrial Marketing and Purchasing?
    What do we mean by ‘market’ in industrial marketing and purchasing? Pauliina Ulkuniemi1 and Jaana Tähtinen 2 Paper submitted to 20th Annual IMP-Conference 2 - 4 September 2004 Copenhagen, Denmark 1 Assistant Professor, University of Oulu, Department of Marketing, P.O. Box 4600, 90014 Oulun yliopisto, Finland, tel. +358 8 553 2941, fax. +358 8 5532906, email: [email protected] 2 Acting Professor, University of Oulu, Department of Marketing, P.O. Box 4600, 90014 Oulun yliopisto, Finland, tel. +358 8 553 2586, fax. +358 8 5532906, email: [email protected] 1 What do we mean by ‘market’ in industrial marketing and purchasing? Abstract One of the most basic concepts in any field of business management is undoubtedly the concept of market, especially within the field of industrial marketing and purchasing. However, the content and definition of market as a concept has received only scant attention in the research within marketing discipline. The purpose of this paper is to take one step towards a more specified conceptualisation of the market especially in the industrial marketing and purchasing context. Moreover, the aim is to give some preliminary views on what kind of conceptualisation would enable the industrial marketing and purchasing research to understand the phenomenon in a most fruitful way. The paper identifies the conceptualisations of market existing in the marketing literature. In addition to this, as a conclusion, the paper puts forward a suggestion that the conceptualisation of the market as a process would provide the most fruitful way of defining the concept for the specific context of industrial marketing and purchasing.
    [Show full text]
  • Fact Sheet (PDF)
    WE’RE A FULL-SERVICE MARKETING AGENCY DEDICATED TO INDUSTRIAL MARKETING. INDUSTRIAL is an integrated marketing agency specializing in turnkey, innovative solutions for manufactures, distributors, and service providers. Founded in 2005, INDUSTRIAL serves a wide range of clients across the automotive, food, healthcare, metal fabrication, and power industries, among others. In 2013, we were named one of Nashville’s “Best Places to Work.” The agency’s own media and technology conference – Murmuration – won the “Best in Tech” award from the Nashville Technology Council. We are a veteran of over 250 online and offline marketing projects, we recognize the importance of understanding a client’s industry, visitor types, and user experience. More importantly, we’re sticklers for on-time, under budget, and on-target client collaboration. OUR CLIENTS INCLUDE WHAT WE DO VF WORKWEAR By combining industrial expertise with leading-edge technology, we COATS/AMMCO plan, design, execute, and measure integrated marketing strategies MFG DAY that leverage marketing automation, business intelligence, media, PAM TRANSPORT and award-winning design to connect suppliers with buyers LANDAIR wherever, whenever, and however they live online. BALDOR MOTORS Our solutions range from strategic agency-of-record engagements to MOTION INDUSTRIES turnkey inbound lead generation programs to discrete projects such ITW DYNATEC as class-leading industrial websites, e-commerce platforms, and WEARWELL integrated marketing campaigns. OUR LEADERSHIP STRATEGY JAMES SOTO Founder and CEO Brand Strategy Market Research Content Strategy Public Relations SHERI WOFFORD Controller Digital Strategy Social Media OUR ADVISORY BOARD TECHNOLOGY MITCH FREE Founder, MFG.com E-Commerce Websites App Development Industrial Websites Product Data Services MARCUS WHITNEY Co-founder, Moontoast Marketing Analytics Responsive Websites JON SHEARER Exec.
    [Show full text]
  • GENDER DIFFERENCES in RESPONSE to EROTIC ADVERTISING Kozhouharova V
    WEB ISSN 2535-0013 SCIENTIFIC PROCEEDINGS INTERNATIONAL SCIENTIFIC CONFERENCE "HIGH TECHNOLOGIES. BUSINESS. SOCIETY 2017" PRINT ISSN 2535-0005 GENDER DIFFERENCES IN RESPONSE TO EROTIC ADVERTISING Kozhouharova V. Sofia University “St. Kliment Ohridski” [email protected] Abstract: Companies make use of sexual appeal in advertising more now than ever. The purpose of this article is to gain a better understanding of how men and women perceive sex in advertising. Articles suggest that young men are not as affected as young women concerning buying behavior and self-confidence by the sexual appeals in advertisements. Keywords: EROTIC STIMULI, ADVERTISING, GENDER, GENDER DIFFERENCES 1. Introduction viewer or simply try to bring out sexual arousal. The second form of sexual behavior involves two models (or more) engaging each other People all over the world are bombarded every day with an in sexual contact. The degree of explicitness of the encounter can increasing number of advertising messages on different channels vary from simple displays of affection, to inferred intercourse. such as television, radio, print, posters, internet and social media The authors state that physical attractiveness among humans is a channels. Advertising can be defined as any paid form of non- trait that is central for foreseeing interpersonal attraction and mate personal promotion transmitted through a mass medium. The key selection. Features of physical appearance, including facial beauty difference between advertising and other forms of promotion, such and complexion, play a great role in sexual interest and desire. For as personal selling, sales promotion and publicity is that advertising this reason, physically attractive models in advertising can be, and communicates with large numbers of people.
    [Show full text]
  • Brand Worlds in Industrial Marketing, Operating Companies
    BRANDWORLDSININDUSTRIALMARKETING benjamin österle BRANDWORLDSININDUSTRIALMARKETING dissertation to obtain the degree of doctor at the University of Twente, on the authority of the rector magnificus, prof. dr. T.T.M. Palstra, on account of the decision of the Doctorate Board, to be publicly defended on Friday, the 22nd of March 2019 at 14:45 hours by benjamin österle born on the 06th of November 1986 in Leonberg, Germany This dissertation has been approved by the Supervisor Prof. Dr. Ir. J. Henseler and the Co-supervisor Prof. Dr. M. M. Kuhn Cover design: Alexander Grimme Printed by: ProefschriftMaken BV, proefschriftmaken.nl Lay-out: Based on classicthesis by André Miede and Ivo Pletikosi´c ISBN: 978-90-365-4733-8 DOI: 10.3990/1.9789036547338 c Benjamin Österle, 2019, Stuttgart, Germany. All rights reserved. No parts of this thesis may be reproduced, stored in a retrieval system or transmitted in any form or by any means without permission of the author. Alle rechten voorbehouden. Niets uit deze uitgave mag worden vermenigvuldigd, in enige vorm of op enige wijze, zonder voorafgaande schriftelijke toestemming van de auteur. graduation committee Prof. Dr. G. P. M. R. Dewulf University of Twente Chairman Prof. Dr. Ir. J. Henseler University of Twente Supervisor Prof. Dr. M. M. Kuhn DHBW Stuttgart Co-supervisor Prof. Dr. Ir. P. C. de Weerd-Nederhof University of Twente Dr. Ir. G. M. Bonnema University of Twente Prof. Dr. E. Nijssen Eindhoven University of Technology Prof. S. Guercini, PhD University of Florence Prof. Dr. G. Christodoulides American University of Sharjah Prof. em. Dr. Ir. A. O.
    [Show full text]
  • Co-Branding on Industrial Markets
    Industrial Marketing Management 34 (2005) 706 – 713 Co-branding on industrial markets Anders Bengtsson a, Per Servais b,* aDepartment of Marketing, Sawyer School of Management, Suffolk University, 8 Ashburton Place, Boston, MA 02108, USA bDepartment of Marketing, University of Southern Denmark, Campusvej 55, 5230 Odense M, Denmark Abstract During the last decade branding has developed to be one of the main focus areas in consumer marketing. In the industrial marketing area there has only been limited attention to this phenomenon. In this paper we focus on how co-branding can be used on industrial markets to increase value. Through an empirical study of professional purchasers’ attitudes towards co-branding activities between two companies, we explore the potential of this strategy. D 2005 Elsevier Inc. All rights reserved. Keywords: Branding; Co-branding; Networks 1. Introduction Among brand builders, we have seen an increasing interest for engaging in brand partnerships. Through the use Classical theories of brand management generally focus of co-branding, where two or more brands endorse each on how companies can build strong consumer brands that other in the marketplace, companies seek to build brands differentiate one seller from another (e.g., Aaker, 1996; more successfully compared to what each of the partner Kapferer, 1997). Traditionally brands have been considered brand could do on their own hand. Co-branding is used as the means of establishing a desired position in the minds extensively in consumer markets, especially on the U.S. of the customers that through perceived added values market where it is a common strategy among food (Brown, Shivashanker, & Brucker, 1989) could attract loyal manufacturers.
    [Show full text]
  • State of Industrial Sales & Marketing 2020
    State of Industrial Sales & Marketing 2020 A research report exploring industrial sales and marketing approaches, strategies, and tactics in Australia. 1 Foreword Dr. Michael Valos Peter Zafiris Imran Khan Deakin University Industrial Ideas Salesforce Dr. Michael Valos is a Senior Lecturer in the Department Peter Zafiris is an industrial marketer and the founder of With more than 20 years global experience in corporate, as of Marketing at Deakin University. Michael’s academic Industrial Ideas; a marketing consulting agency dedicated to a consultant and as a technologist, Imran understands the research work has won a number of awards and published Australian industrial companies serving the manufacturing, challenges that industrial companies are facing across both in European, North American and Australasian journals. construction, mining, oil, gas and energy sectors. their B2B and B2C channels. This year Michael has partnered with Peter Zafiris and Imran With over 20 years of experience, Peter has worked in the Throughout Imran’s career he has helped large and small Khan to design a unique research study examining the key steel industry, leading national sales and marketing teams. companies transform into customer centric organisations sales and marketing pressure points for industrial sectors Peter is proud to have commissioned the State of Industrial across Manufacturing, Utilities, Mining, FMCG and other in Australia. The study involved an online survey and depth Sales & Marketing, with the academic rigour of Dr Michael industries. Imran and the Salesforce team in Australia are interviews to cut through market sentiment and uncover Valos from Deakin University and the industrial sales and proud to have sponsored the State of Industrial Sales and deep insights about industrial sales and marketing in marketing expertise of Imran Khan from Salesforce.
    [Show full text]
  • INDUSTRIAL MARKETING BUDGET GUIDE Build a Rock-Solid Budget That Proves Marketing Is a Smart Investment
    2020 INDUSTRIAL MARKETING BUDGET GUIDE Build a rock-solid budget that proves marketing is a smart investment. “ A man who stops advertising to save money is like a man who stops a clock to save time. “– HENRY FORD STARTING THE INDUSTRIAL MARKETING BUDGET CONVERSATION If you’re like most marketers at industrial companies, In this guide, we’ll help you lay the foundation building a strong business case for why marketing is for setting up a successful marketing budget a smart investment is an annual uphill climb. Whether conversation with your CFO, including: it’s defining what percentage of your overall budget should go to marketing, how to create a marketing • Why it’s important to start with changing budget based on objectives, or getting buy-in on your perceptions of industrial marketing marketing budget from key stakeholders, you’re not • Why you need to create an industrial marketing alone in the struggle. action plan before you budget • Two common industrial marketing budget In fact, 64% of marketers surveyed in approaches that can help you define an initial IEEEGlobalSpec’s 2019 Trends in Industrial Marketing1 direction reported having difficulty, in some way with how marketing fits into their overall organization. Let’s dive in. 3 THE 2020 INDUSTRIAL MARKETING BUDGET GUIDE AVG MARKETING SPEND OF ANNUAL BUDGET CHANGING 11% PERCEPTIONS OF INDUSTRIAL MARKETING 6.4% Unfortunately, many companies in manufacturing and the industrial sector struggle to see marketing as a key driver of growth, evidenced by the historical lack of investment. According to the 2018 CMO Survey2 of nearly 3,000 marketing executives across various industries, marketing spend averages 11% of total budgets, or roughly 6.9% of annual revenue.
    [Show full text]
  • 1. Characteristics of Industrial Pricing 2. Factors Affecting Industrial Prices 3
    Industrial Pricing • The objective is to help understand : 1. Characteristics of industrial pricing 2. Factors affecting industrial prices 3. Industrial pricing objectives/methods/approaches/policies 4. Leasing 5. New product pricing The Right Price • Uniqueness of price in the marketing mix is that it is the only element that generates revenue, all other elements incur costs. • Right price is one of the important determinants of business success. • Price has to be consistent with other marketing mix elements and also has to be responsive to the demand. • Demand or competitive conditions sometimes make the absorption of full cost into price impossible. • Companies with specific objectives sometimes use price as a strategic variable to achieve the firm’s objective. Characteristics of Industrial Prices- 1 1. True price an industrial customer pays is different from the list price because of delivery & installation costs, discounts, training costs, trade- in-allowances, financing costs etc. 2. Price is not an independent variable. It is intertwined with product, promotion and distribution strategies. 3. Price of industrial goods cannot be set out without considering other products that are complements or substitutes sold by the company. 4. Industrial prices are established, in many cases, by competitive bidding on a project-by-project basis. Price resolutions through negotiations is very common. Characteristics of Industrial Prices- 2 5. Prices is often a more flexible decision area since it can be altered in numerous ways such as changing ¾ The quantity of goods and services, ¾ Premiums and discounts offered, ¾ Time and place of payment 6. Industrial pricing is often characterised by an emphasis on fairness.
    [Show full text]